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A slower-than-expected pace of economic activity in the U.S. and a “high level of uncertainty” over strains in the eurozone led to the Federal Reserve's decision Aug. 1 to keep the federal funds rate at “exceptionally low levels” through 2014 and to continue purchasing longer-duration Treasury securities through 2012, according to the minutes released Wednesday from the Federal Open Market Committee's July 31-Aug. 1 meeting.

With modest increases in consumer spending and employment, some participants at the meeting “indicated that they had lowered their near-term forecasts for economic growth,” the minutes showed. Many committee members said they expected the unemployment rate to remain high through 2013, and inflation “at or below” 2%. A new large-scale asset purchase program appealed to many members who thought it would provide additional economic boost “by putting downward pressure on longer-term interest rates.”

“Overall, they really seemed far more supportive for additional monetary action,” said Nils Overdahl, senior fixed-income portfolio manager with New Century Advisors.

“They're signaling that they've got a lot of firepower and they're willing to use it. If they do it right, their talk is able to do the work for them. We continue to think that rates will stay lower, so we position for that. We are favoring an overweight of duration.”

While many FOMC members supported extending the actions further into the future, they agreed to defer a decision until the next meeting of the committee, which is scheduled for Sept. 12-13.